Eastern's Woes Tied To Pressure

Published: July 31, 1990

(Page 2 of 2)

The supervisors and executives are charged with what is called ''pencil whipping'' in the industry. The indictment says they signed their own names on records for work that was not accomplished, forged the names of other employees and used fictitious names.

Conflict With Unions

The period in which the practices went on coincided with a period of escalating conflict between Eastern's management and its three unions -the pilots, machinists and flight attendants. It covers the last year when Frank Borman, the former astronaut, was chairman and the three years when Frank Lorenzo controlled Eastern as chairman of the Texas Air Corporation, now called Continental Airlines Holdings Inc. The airline, which filed for protection of the bankruptcy court in March 1989, was placed under the control of a court-appointed trustee, Martin Shugrue, in April.

After a period of good relations and some profitable quarters in 1985, Eastern by early 1986 had begun to lose money and was coming under pressure from its banks, which held about $2.5 billion in debt, to win union concessions and become profitable.

While Mr. Borman was able to secure deep cuts from the flight attendants and pilots, he failed with the machinists. The company was sold to Mr. Lorenzo's company in 1986.

Lorenzo Team Brought In

By October 1986 Mr. Lorenzo had taken over as chairman and brought in his own management team, including Phil Bakes, the former head of Continental Airlines, as president.

One former Eastern pilot who monitored what happened in maintenance but did not want to be identified said that Eastern executives installed a carrot-and-stick approach. For example, a manager of maintenance at Kennedy who met the company's goals for getting airplanes out on time would get extra money.

If the supervisors and managers failed, the pilot said, they would face enormous pressure from above, including the threat of a transfer.

An inspection of Eastern records in Miami by a team of F.A.A. investigators that found that Eastern managers ''were allowing aircraft to be moved without adequate corrective action'' concluded that the incentive program was partly to blame.

Guilty Plea Entered

By The Associated Press

A former Eastern Airlines foreman pleaded guilty yesterday to charges that he ignored vital maintenance and safety repairs and then falsified records to make it appear the work had been done.

Elia Dragone, 29 years old, of Jersey City, was the first employee of the troubled airline to plead guilty in a broad scheme that allegedly allowed unsafe airliners to fly.

Mr. Dragone, who worked at Kennedy Airport, told a Federal District Court judge in Brooklyn that the fraud was orchestrated by his superiors at the airline.

Named in 20 Counts

Mr. Dragone, named in 20 counts of the indictment, pleaded guilty before Judge I. Leo Glasser to two counts -conspiracy and obstructing a Federal Aviation Administration investigation into the airline. He faces five years in prison and a $250,000 fine on each count at sentencing Oct. 17. He was allowed to remain free on his own recognizance.

In exchange for cooperating in the investigation, the Government will dismiss the other charges against Mr. Dragone and recommend leniency in sentencing, Charles W. Gerber, an Assistant United States Attorney, said.

According to a four-page plea agreement signed on June 18, Mr. Dragone will testify at trials against Eastern and its employees. He will also cooperate in investigations of the airline by the F.A.A. and other Government agencies.